A notice of the appeal was filed May 11 in federal court in
Manhattan. BNY Mellon, the trustee for the notes, seeks reversal
of U.S. District Judge Paul Engelmayer’s May 8 ruling that
Chesapeake met a deadline in the notes’ indenture contract for
calling the bonds early at par.

Chesapeake, the second-biggest producer of natural gas in
the U.S., has said a plan to refinance the debt, set to be
executed today, will save about $100 million by tapping lower
interest rates. Investors including River Birch Capital LLC had
challenged the company’s plan and sided with BNY Mellon in the
case.

Chesapeake sued BNY Mellon in March after the New York-based bank challenged its bid to redeem the notes. The energy
company argued the March 15 deadline in the indenture was for
sending a notice of early redemption to investors. The bank
argued the date was for such a call to be executed, and that
notice should have been sent at least a month earlier.

A three-day non-jury trial last month focused on what
decision-makers at Chesapeake intended at the time the indenture
was drafted, and what investors expected after the debt was
issued. Engelmayer ruled that although the indenture contract
could have been worded more clearly when describing the
deadline, it should have been obvious that Chesapeake intended
to give notice of an early call as late as March 15.

‘Tortured and Incoherent’

BNY Mellon (BK)’s interpretation of the indenture was “tortured
and incoherent,” Engelmayer said in the ruling.

“We are confident in the legal basis of the ruling and
expect to prevail on appeal,” Paul Caminiti, an outside
spokesman for Chesapeake with Sard Verbinnen & Co., said
yesterday in an e-mail. “The filing does not stay the ruling in
Chesapeake’s favor, and the redemption of the notes will go
forward on Monday as Chesapeake previously announced.”

In court hearings before the trial, neither party could
explain to the judge how an appeal might work, since the early
redemption has already been put in motion and is scheduled to be
executed today.

BNY Mellon initially agreed with Oklahoma City-based
Chesapeake in February that the early redemption would meet the
deadline. The bank changed its position after River Birch argued
Chesapeake had started the process too late, Chesapeake said in
court papers.

The case is Chesapeake Energy Corp. v. Bank of New York
Mellon Trust Co., 13-cv-01582, U.S. District Court, Southern
District of New York (Manhattan).